More than $17 million paid to businesses through the wage subsidy scheme has had to be refunded to the Government after businesses which were not entitled to the scheme took the money.
The Government is now looking into criminal prosecutions for businesses who have wrongly taken taxpayers' money.
"If a business provides false or misleading information and knowingly commits a crime, they will held to account. That's a given," Minister of Social Development Carmel Sepuloni said.
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The Ministry of Social Development (MSD) has so far undertaken more than 2400 random and targeted audits of businesses who have taken advantage of the scheme.
Almost 1300 applicants have voluntarily advised they would pay back the subsidy – totalling $16.2 million, according to MSD figures.
But the Government's auditing resulted in 56 applications being asked to refund either all, or part of the subsidy.
They are required to pay back $1.25 million – MSD is now looking into criminal prosecutions.
"The vast majority of businesses are doing the right thing and don't need to worry about the audit process," Sepuloni said.
"But New Zealand taxpayers and those who have accessed the scheme properly expect to see a fair process."
Not all businesses who have had to repay the money will face legal actions, she said.
For example, some businesses have seen their circumstances change following receipt of the subsidy, including where insurance may have been received, or new revenue forecasts show the business won't suffer a 30 per cent drop.
"A number of businesses have come forward when this happens by offering to repay the subsidy, and we encourage any business who may have made a mistake to do the same."
So far, $10.4 billion has been paid out through the scheme, benefiting more than 1.6 million workers.
Finance Minister Grant Robertson said the Government knew the vast majority of New Zealand business owners would access the scheme as intended.
"We owe it to those workers and employers to make sure their good work isn't undermined by anyone abusing the scheme.
"We also have a duty to all New Zealanders to ensure taxpayer money is going where it is intended to support the economy."